Turkey considers shorter bankruptcy protection period

Turkish corporates have come under stress following last year’s currency crash, which hit companies with foreign currency debt and tipped the economy into a recession.

Bloomberg/Kerem Uzel

Turkey is considering limiting the amount of time companies in trouble can be shielded from debt repayments, a welcome step for the nation’s banks facing a wave of debt restructuring requests after last year’s recession, reported Bloomberg.

The Treasury and Finance Ministry is working on the necessary regulatory changes to lower the so-called concordat period from the current ceiling of 23 months.

The period will be capped at six months to a year.

The plan highlights the ministry’s efforts to help banks clear their balance sheets from bad debt or the uncertainty of companies operating under bankruptcy protection for lengthy periods. The banking regulator is working on a related plan to help lenders drive their non-performing loan ratios after a bump this year.

Banks have since seen a spike in requests to restructure debt or applications for bankruptcy protection.

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